UltraTech reported net sales of R5,600 crore (14% y-o-y, -3% q-o-q), operating profit of R1,000 crore (-4% y-o-y, -12% q-o-q) and net income of R620 crore (-7% y-o-y, -16% q-o-q) against our estimates of R5,500 crore, R1,100 crore and R700 crore, respectively. Volume growth of 16% y-o-y was above our estimate of 10% y-o-y as sales from recently acquired Gujarat units were included for part of June. However, the benefits of higher volumes were lost to absence of improvement in realisations R4,792 a tonne (-5% y-o-y, flat q-o-q) in Q1FY15.
The price increase in South India notwithstanding, cement realisations failed to improve for UltraTech in Q1 due to improvement in prices in other regions and resumption of Binani Cement operations. The higher operating costs were due to higher employee costs (10% y-o-y, 17% q-o-q), higher power costs (22% y-o-y, 2% y-o-y) and higher freight costs (21% y-o-y, -3% q-o-q).
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